Elliot Rose looks ahead to the likely hot potatoes in property
The influence of sustainability and transformation plans and the Carter Report on the way NHS trusts deliver and manage their estates are well publicised, but what other issues do they face coming into 2017 and what steps should they be taking?
Clearly, the lack of funding will continue to dominate strategic direction. But technological advancements, national, regional and local initiatives and alternative funding routes all have the potential to enable transformation of service delivery for patients and providers.
Digital healthcare could be a major influencer. Technological advancements are largely geared up to support self-care in the home. Empowering patients to co-ordinate the delivery of their own care could free up capacity in the system and drive efficiencies. Whilst this is reliant on investment in new technologies – and a transformation exercise to adapt working practices – it has the potential to change spatial and estates requirements significantly.
STPs are looking at collaborative ways of tackling common challenges, using estates as a facilitator. Digital healthcare will be crucial in enabling the ambitious vision for service transformation outlined in these plans. Estates strategies will need to keep pace with and exploit developing technologies on a national and regional scale.
Trusts would benefit from creating a robust infrastructure to drive better digital healthcare integration and being open to working with partners.
Disposal of public sector land for new homes
The March 2011 budget set out the government’s Plan for Growth, with the intention of disposing of surplus government land. The Department for Health itself has a target to free up land with capacity for 26,000 new homes by 2020.
However, a recent Commons public accounts committee inquiry found that at the end of June 2016, the government had only disposed of land with the capacity to build around 7 per cent of the target amount of new homes. The inquiry’s key recommendation was that the disposal of public sector land needs to speed up considerably for targets to be met.
To incentivise the freeing up of land for disposal as part of the STP process, NHS England are considering allowing some parts of the country to retain all the proceeds from land disposals for re-investment locally. This would negate fears that proceeds from land sales would be funnelled into central government, though whether this policy is adopted, it is not wise to sit on dead space – streamlining the estate still needs to happen.
The main action for NHS trusts is to take stock of their estates, look at where services need to be delivered and consider disposing of poorly located buildings.
NHS Property Services move to market rent
From the beginning of the 2016/17 financial year, NHS Property Services moved to market-based rental charging on their freehold-owned properties, resulting in higher rental charges for the majority of occupants. This is significant because, as the property company for the Department of Health, they own approximately 10 per cent of the whole NHS estate. Though not a recent change, the impact will continue to be felt in the coming year.
As a consequence of higher rental charges, owners and occupiers of NHS estates will need to maximise the utilisation of their space and make it work much better. Dead space must be freed up and smarter working practices adopted which use improved IT to make space more flexible. Additionally, services must be located strategically to ensure maximum benefit from costlier estate.
NHS trusts should look at the utilisation of their estates - clinical space is expensive, back office staff should be using appropriate space.
One Public Estate (OPE) funding
A major plank of the government’s investment strategy is its commitment to releasing the value of public sector land and property. This is not just about generating financial savings but also about finding opportunities for growth, particularly for jobs and housing. The November 2015 spending review extended OPE with £3m more funding to help local authorities work with other local public sector property owners and design more efficient asset management strategies.
OPE has the potential to unlock capital value and revenue savings tied up in surplus land, whilst supporting the wider determinates of health through local job creation and economic growth. It can also enable the development and implementation of strategic initiatives that would otherwise have lacked the funding to get off the ground.
STPs are collaborating across the public estate, developing new ways to deliver services like health and social care hubs, and OPE has funds that could help.
Disposal of non-core estate that is no longer fit-for-purpose is an entirely logical decision – it delivers revenue savings in the form of holding costs, capital receipts from sale and frees up land for other uses such as residential or commercial. However, once sold, any uplift in value is lost (disregarding the potential for overage payments that generally have a limited ability to recoup money).
Sometimes a bolder approach is best. NHS property can be repurposed to provide alternative rental or commercial opportunities. Whilst not for everyone, it gives trusts the opportunity to retain potentially valuable assets with a longer-term view. Retention of valuable estate for income generation has the potential to deliver substantial financial benefits.
NHS trusts should consider repurposing some property for commercial or residential use for longer-term financial gain.
Elliot Rose is a property surveyor at Essentia. For more advice on managing NHS estates visit www.essentia.uk.com